⚔️ How Leverage Silently Destroys Good Traders
🎯 The Lesson
Leverage is like a double-edged sword.
It gives small traders big power — but one wrong move, and that same power wipes them out.
It’s not leverage that kills accounts.
It’s using it without a plan.
💣 What Leverage Really Means
Leverage multiplies your position size compared to your actual capital.
Example:
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Account balance: $1,000
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Broker leverage: 1:100
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Buying power = $100,000
That means a 1% move in the market equals a 100% change in your account.
Impressive? Yes.
Sustainable? Never.
⚙️ Example: How It Blows Up
You open a 1-lot position on EUR/USD ($100,000 value) with $1,000 capital.
Price moves against you by 50 pips.
Each pip ≈ $10 loss → $500 total.
That’s –50% of your account in one small move.
Two losses like that and you’re done.
Meanwhile, a disciplined trader risks 1% per trade (0.01 lot = $1/pip).
Same move → only $50 loss → account still safe.
📊 The Math of Survival
To recover from a 50% loss, you need a 100% gain.
That’s why big leverage = slow death.
The smaller your leverage, the easier recovery becomes.
| Drawdown | Needed Gain to Recover |
|---|---|
| 10% | 11% |
| 25% | 33% |
| 50% | 100% |
| 75% | 300% |
Use this table as your constant reminder.
🔑 Safe Leverage Guidelines
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For forex: 1:10 to 1:30 is ideal.
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For indices/commodities: 1:5 to 1:20.
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Keep margin level above 500% at all times.
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Never risk more than 2% of your equity on any trade, no matter how “certain” it looks.
🚀 Takeaway
Leverage isn’t a shortcut — it’s a magnifier.
It amplifies both skill and stupidity.
Use it wisely, and you’ll last.
Abuse it, and even the best strategy won’t save you.
📢 Join my MQL5 channel for more trading & risk-management insights:
👉 https://www.mql5.com/en/channels/issam_kassas
